Investcorp Doubles Its Assets Under Management to $23 Billion

The Investcorp Newsletter

Investcorp doubles its Assets Under Management to $23 billion

Investors Conference 2016 Harvard Symposium in New York city Mubadala Development Company Corporate Investment Agromillora, Al Borg, Corsec/Nebulas and Corneliani Real Estate 901 Fifth Avenue, Boston & Denver Industrial Portfolio, 2016 Residential Portfolio Calligo Investcorp to invest $20 million in cloud solutions provider

The Review | December 2016 Contents Mahfoodh Alardhi Letter from Mohammed 05 Al-Shroogi Welcome byMohammed 04 investor strategicnew equity Mubadala –Investcorp’s 11 acquisition $12bn to itsAUM via3i Investcorp added 10 YorkDinner inNew Investcorp’s first Annual 08 Abu Dhabi Investors Conference in 06

13 Laboratories stake inAlBorg Medical Investcorp investsina 12 with Corneliani brand toluxury itsportfolio Investcorp addanother 17 solutions provider invest $20millionincloud Calligo, Investcorp to 16 SecureLink Chief Executive Officer, Q&A withMarco Barkmeijer, 15 Coresec on board: Nebulasand security providers come Two prominent cyber- 14 plants andtrees ofhigh-yielding developer Agromillora, aglobal Investcorp acquires 18 Record Levels of US Real Estate Deal Activity

22 Dubai Chamber of Commerce and Industry 23 Harvard Symposium in New York city 24 New Joiners

26 Global Macro Outlook by Rebecca Hellerstein 4

Welcome by Mohammed Al-Shroogi Creating real value fter an incredibly busy 2016, I was I also want to mention briefly our pleased to announce we have investment in luxury Italian menswear increased our year-end dividend by specialist, Corneliani. As you no doubt 60A per cent and we can follow this milestone know, Investcorp has a long and successful by distributing over $700 million to investors history in the luxury sector. We will be using in the first quarter of our 2017 fiscal year. In our experience to help bring the Corneliani terms of deal flow, Europe, the US and the brand to new markets around the world. GCC have all been very active, reflecting the global nature of the firm. On the exits front, the IPO of L’azurde on Tadawul, the Saudi Stock Exchange, was a In recent months, we have accelerated our significant milestone. Upon listing, L’azurde pace of acquisitions and complemented became the first majority private equity- that with some very attractive exits. In the owned business in Saudi Arabia to IPO on last six months alone, we have invested its exchange. Our partnership with L’azurde in businesses across a range of sectors in has been a great journey and this marked Europe, from cybersecurity to luxury and the start of a new chapter. In addition to agriculture, as well as in the leading private L’azurde, we also generated solid returns medical laboratory chain in the GCC, Saudi following a trio of exits from our European Arabia’s Al Borg Medical Laboratories. and North American portfolios - GL Meanwhile, in the US, our Real Estate team Education, Polyconcept and Tyrrells. cemented its position as the top private Gulf-based investor in the asset class. In the US, our Real Estate team made a number of investments over the last few The Al Borg transaction is a perfect example months, acquiring properties in major of Investcorp identifying a high-quality metropolitan cities across the country. company in which we believe there is even All of the deals were consistent with our greater potential, in a sector that is ripe strategy of investing in high-quality assets for growth. This is our approach to all our with strong tenant bases, which we believe Corporate Investment deals. Saudi Arabia, will provide attractive cash yields as well specifically, is a market that we believe has as upside. The standout acquisition was very strong fundamentals and we are very a $223.5 million office tower in Seattle, positive about its outlook – we are looking Washington, known as 901 Fifth Avenue. 901 closely at a number of other potential Fifth is 90% occupied by businesses from a investments in the Kingdom in selected diverse range of industries, from technology, high-potential sectors. to legal services, to professional services, which is exactly what we look for in our Real In Europe, our Corporate Investment team Estate assets. is particularly focused on technology and cybersecurity. Alongside our portfolio It has been a tremendously busy period for company SecureLink, we acquired three Investcorp but we have no plans to slow dynamic cybersecurity companies – Nubulas down. We are actively pursuing a number of in the UK, Coresec in Scandinavia and opportunities across all of our business lines IT-Cube in Germany. These acquisitions and we look forward to bringing these to add significant scale and expertise to you over the coming months. SecureLink and are part of our strategy to grow SecureLink into a pan-European Mohammed Al-Shroogi Co-Chief Executive Officer cybersecurity specialist. Elsewhere, we completed an initial investment in Calligo, a rapidly growing provider of cloud solutions. 5

Letter from Mohammed Alardhi Global Growth must start this letter by saying how have made real wonderful it was to see so many progress towards of you in Abu Dhabi at our Annual achieving our goals. IInvestors’ Conference. I would like to extend a particular thanks to His The recent agreement Highness Sheikh Mohammed Bin Zayed to acquire the Al Nahyan, Crown Prince of Abu Dhabi debt management and Deputy Supreme Commander of business of 3i was the UAE Armed Forces, for granting his a game changer patronage to the event. We were also for us. It will see us fortunate to have His Highness Sheikh more than double Hamed bin Zayed Al Nahyan, Chief of our Assets under the Abu Dhabi Crown Prince’s Court and Management to $23 Managing Director of ADIA, His Highness billion and it will Sheikh Nahayan Mabarak Al-Nahayan, act as a catalyst for UAE Minister of Culture and Knowledge our strategy to grow Development, and His Highness Sheikh into a firm managing Hamdan bin Mubarak Al Nahyan, join $25 billion over us at the Conference. In addition to the the medium term. presentations and panel discussions, The deal places the event’s success was largely down to Investcorp at the the engagement of all of you, our valued centre of the global investors and partners. I hope that you credit space, an is tremendous. While we have set bold all found the Conference as insightful asset class that will targets for Investcorp, we have a clear and enjoyable as I did. complement our existing alternative investment products. Specifically, we are roadmap and I am confident we can In the last six months, there has bringing on board a team that focuses achieve our goals. I truly appreciate the been a transformation in Investcorp’s on investing in senior secured loans, ongoing support of all our shareholders positioning as an asset manager. While which is a slice of the capital structure and investors. This support has been our roots and our values are firmly that has been performing incredibly well central to all our achievements and will planted in the Gulf, we have broadened and which we believe will continue to continue to be so. our horizons. generate attractive returns with minimal I hope you enjoy this edition of The volatility. Investcorp began life over 30 years Review and I look forward to providing ago as a bridge between surplus As we grow as a firm, we also needed to you with further strategic updated on the capital in the Gulf and opportunities enhance our institutional shareholders Firm over the coming months. for investment in the West. It has been base so that we have the capacity doing this very successfully since day to reach our goals. Earlier this year, one. However, today, we are living in a we were proud to announce that very different world. Mubadala Development Company, one of the strategic investment arms of the Mohammed Alardhi There is a new financial and economic Government of Abu Dhabi, acquired Executive Chairman paradigm in the world. We are an a 20% stake in our firm, joining our institution with ambitions to be ranked growing list of institutional shareholders. alongside the world’s foremost asset This was a major milestone in the managers, delivering enhanced value history of Investcorp and was a clear across a range of products to investors endorsement for our strategic vision. around the globe. We are still at the beginning of this new journey but we The opportunity that lies ahead of us 6

Investors Conference Investors Conference 2016 in Abu Dhabi

nder the patronage of His The Conference was opened by world. Sharing the same vision of Highness Sheikh Mohammed Bin Investcorp’s Executive Chairman, promoting business co-operation and Zayed Al Nahyan, Crown Prince Mohammed Alardhi, which was followed expansion between the Gulf States and Uof Abu Dhabi and Deputy Supreme by a keynote speech by Her Excellency economies in other parts of the world, it Commander of the UAE Armed Forces, Reem Al Hashimy, UAE Minister of State was a natural step for Investcorp to host Investcorp hosted its 2016 annual for International Cooperation and this significant event in Abu Dhabi.” Investors Conference in Abu Dhabi. His Director General of Dubai Expo 2020 Addressing a room of 300 investors, Highness Sheikh Hamed bin Zayed Al Bureau. Mohammed Alardhi said, “Investcorp Nahyan, Chief of the Abu Dhabi Crown In her keynote address, Her Excellency has achieved an incredible amount over Prince’s Court and Managing Director Reem Al Hashimy, UAE Minister of State the past 12 months. We have signed an of ADIA, His Highness Sheikh Nahayan for International Cooperation and agreement that will see us nearly double Mabarak Al-Nahayan, UAE Minister of Director General of Dubai Expo 2020 our assets under management to $23 Culture and Knowledge Development, Bureau said, “The UAE Government billion and we have closed a near record and His Highness Sheikh Hamdan has always been focused on making number of deals – but we have no plans bin Mubarak Al Nahyan were also the country one of the most business- to slow down. We are going to use this in attendance at the opening of the friendly and welcoming places in the momentum as a springboard to the next Conference. 7

Investors Conference

step of the Investcorp journey.” On the second day of the Conference, Investcorp’s Co–CEOs Mohammed Al- Shroogi and Rishi Kapoor outlined the roadmap for the future of the firm, which was followed by a range of speakers discussing economic, political and investment trends. Mohammed Al-Shroogi said, “As we continue to grow as a firm, we remain focused on three core components of our unique business model – being relevant to our clients’ needs, delivering superior performance and providing the highest possible level of service.” Rishi Kapoor said, “In addition to being very close to our clients in the Gulf and around the world, we will drive Investcorp’s growth by enhancing and diversifying our client offering. We have a clear roadmap ahead and we are confident that we are building an even Administration at Ross School of discussed trends across a range of stronger firm for our clients.” Business, discussed competitive sectors, from Services, to Healthcare, to innovation and a changing world. Cybersecurity. These sessions involved Delegates at the Conference heard from senior executives from Investcorp and its John Greenwood, Chief Economist of There was also a series of panel portfolio companies, past and present, Invesco Ltd., who provided an overview discussions that touched on a number including The Wrench Group, SecureLink, of the global economy in the wake of of asset classes including Corporate OpSec, and CSIdentity. Brexit and the US election. Meanwhile, Investment, Real Estate and Alternative Gordon Hewitt, Professor of Business Investment Solutions. Panellists 8

Investcorp’s first Annual Dinner in New York 9

Events and Conferences

Stephen Hadley and Martin Indyk

n October 16, 2016, Investcorp latest business initiatives, outlining Director of Foreign Policy at the organised its first Annual Dinner the importance of the US economy Brookings Institution, Ambassador in New York. The event, which for the firm, and sharing highlights Martin Indyk. Both guest speakers gave Owas attended by Investcorp’s contacts of Investcorp’s investments in North an overview of their findings following and friends in financial, political and America. a visit to the Gulf and the Middle East, media circles, was held in the Onyx where they met more than five leaders of Mr. Alardhi also welcomed the two Room of the Park Hyatt hotel. states. guest speakers for the event, former Mohammed Alardhi opened the evening US National Security Advisor Stephen with a speech about Investcorp’s Hadley and the Vice President and

CINA Portfolio company’s CFOs conference

FOs of Investcorp’s portfolio and networked, leveraging the power of in Class Closing Process - The 10-Day companies, past and present, being part of the Investcorp family. Five Close. attended a one-day conference interactive sessions were held over the The day concluded with dinner for all Cin New York, hosted by Investcorp’s course of the day on the following topics: conference attendees at BLT Prime. Corporate Investment North America Driving Long Term Value as a Strategic team. Partner to the CEO; Procurement as a Driver of EBITDA; Negotiation Strategies: The conference attracted more than 30 Creating and Maximizing Value; and Best professionals, who shared best practices 10

3i Debt Management

Acquisition of 3i debt management Investcorp adds $12 billion to its AUM Rishi Kapoor nvestcorp made a significant Asia, the US and the Arabian Gulf. We’re a leading global credit investment step forward towards achieving delighted to welcome the 3iDM team to company managing funds which invest its medium-term goal, which was Investcorp and look forward to growing primarily in senior secured corporate Iannounced last year by Mohammed the business further.” debt issued by mid and large-cap Alardhi, when it announced it had corporates in Western Europe and the Rishi Kapoor, Co-CEO of Investcorp, agreed to buy the debt management US. The business has a strong track added, “This is an exciting moment business of 3i (“3iDM”). The proposed record of consistent performance and for us – we see this as a value-added transaction, for a total consideration growth, employing approximately transaction for all sides which will be of £222 million (approximately $271 50 people in London, New York and accretive for Investcorp from day one. million), will significantly enhance Singapore. The existing management Under 3i’s ownership, the 3iDM team has Investcorp’s global franchise as a team of 3iDM will remain intact, with created a compelling alternative credit multi-asset class alternative investment Jeremy Ghose continuing as CEO of investment business which has seen manager by adding $12 billion of assets the overall business and John Fraser assets under management more than under management, bringing the total to continuing to oversee the US operations. double in the past five years. We see approximately $23 billion. this business as one of the central pillars Simon Borrows, Chief Executive of Commenting on the proposed of Investcorp’s product platform going 3i, said, “The 3iDM business has had acquisition, Mohammed Alardhi said, forward and are absolutely committed a strong run under 3i’s umbrella and “This is a milestone deal which will bring to continuing to grow the business on Investcorp is a great home for the together two complementary businesses multiple fronts including fundraising, business going forward given its strong and broadens product diversity for product development and capital reputation as a global diversified existing clients of both Investcorp and support.” alternative investment manager with 3iDM while deepening the geographical a deep and loyal investor franchise. The acquisition is a strategic move for reach of the enlarged business. The The combination provides 3iDM with Investcorp, which last year announced combination brings with it some of access to new and incremental sources that it was targeting growing assets the most talented credit investment of capital through Investcorp’s client under management to $25 billion in professionals in the industry together base in the Gulf and the US. The fit is the medium term, and will add to with a large universe of private and excellent from a cultural, product and Investcorp’s existing menu of product institutional clients spanning Europe, geographical perspective.” offerings across private equity, real estate, and The transaction is the largest ever alternative strategic acquisition made by Investcorp. Total Client Assets Under Management investment It will be fully funded through the Firm’s ($ billion) solutions existing balance sheet, and will not (formerly require any incremental debt financing hedge 2016 2016 PRO FORMA or equity capital given its current strong funds). The capital and liquidity position with a 8% 1% 3% transaction regulatory capital adequacy ratio in 17% is subject excess of 30 per cent and accessible 19% to various liquidity of close to $1 billion at the end 43% 51% regulatory of June 2016. The Firm will continue to 37% approvals maintain strong levels of liquidity and 21% and is capital adequacy after the transaction, expected to significantly above the regulatory $10.8 billion 331 $22.8 billion 381 close in the requirements, giving it considerable AUM employees AUM employees first half of flexibility to fund additional strategic Corporate Alternative Real Estate Client monies Debt 2017. acquisitions where appropriate. Investments Investment Investments held in trust Solutions 3iDM is 11

Mubadala Mubadala Investcorp’s new strategic shareholder

Investcorp’s ambitious growth strategy is backed by a heavyweight investor

Mohammed Alardhi Khaldoon Khalifa Al Mubarak

nvestcorp marked a significant portfolio.” milestone in the institutionalization Established and owned by the of its shareholder base when, in Government of Abu Dhabi, Mubadala’s IJuly, it was announced that Mubadala strategy is built on the creation of Development Company, the Abu Dhabi partnerships and on long-term, capital- based investment and development intensive investments that deliver company, agreed to acquire a 20% strong financial returns, contribute interest in the company. to the growth and diversification of Mohammed Alardhi, Executive Chairman Abu Dhabi’s economy, and create of Investcorp, said: “Mubadala is one opportunities for current and future of the strongest and most respected generations in the United Arab Emirates. investment companies in the GCC Mubadala brings together and manages and globally, so this development a multi-billion dollar portfolio of local, is a significant milestone in the regional and international investments institutionalization of our shareholder and partners with leading global base. This investment is a validation organizations to operate businesses of Investcorp’s blue-chip brand, our across a wide range of industry human capital, and our vision for sectors. These include aerospace, the future. This is a positive step semiconductors, metals & mining, for our stakeholders, including our oil & gas, renewables, information shareholders, investors and portfolio & communications technology, companies.” healthcare, real estate & infrastructure, Khaldoon Khalifa Al Mubarak, Group utilities, and defence services. CEO of Mubadala Development The two-step transaction sees Company, commented: “We welcome Mubadala acquire a 9.99% ownership the opportunity to become a stake immediately, with a further shareholder in Investcorp. From an 10.01% following necessary regulatory investment perspective, the stable and approvals. long term value-creation mission of Investcorp makes it a logical addition to Mubadala’s diverse financial investment 12

Corporate Investment

Investcorp invests in Saudi Arabia’s Al Borg Medical Laboratories l Borg Medical Laboratories accreditations and is a trusted brand became Investcorp’s seventh name. investment in the Kingdom of Investcorp will be partnering with the SaudiA Arabia when it announced that other existing shareholders of Al Borg that an entity managed by it has invested include Saudi-based Elaj Medical Services in a stake in what is the leading private Company, an integrated healthcare group medical laboratory chain in the GCC. operating 25 healthcare centres across Established in 1999 in Jeddah, Al Borg has the GCC and Egypt, and Kuwait-based 53 laboratories across 8 countries in the Boubyan Petrochemical Company. GCC and Africa, with a clear leadership Mohammed Al-Shroogi, Co-Chief position in Saudi Arabia. Employing Executive Officer of Investcorp, over 900 personnel, Al Borg offers a wide Tristan de Boysson commented, “The investment in Al range of routine and specialty medical Borg reaffirms our commitment to laboratory testing services to hospitals, continue to strengthen our brand, supporting regional businesses that clinics, corporates and individuals. The consolidate our position in our domestic have potential for growth. We are Company has a leading market position, market and facilitate our growth plans extremely excited about this investment possesses the highest levels of industry across the Middle East.” and believe that our combined efforts will result in even more success for the Tristan de Boysson, Managing Director, Company. The healthcare sector in Saudi Investcorp Corporate Investment – MENA, Arabia is underpinned by favourable said, “Al Borg benefits from the positive demographics, supportive regulation healthcare dynamics in the region. A and increasing demand through greater key focus for our team will be to help medical awareness.” generate additional growth opportunities for the business, leveraging the full Dr. Mohammed Fawaz Al Bishry, expertise Investcorp has.” Chairman of the Board of Al Borg Medical Laboratories, added, “We are delighted to be partnering with Investcorp, as we believe this will provide our business with the additional resources and expertise to 13

Corporate Investment Agromillora The leading global developer of high-yielding plants and trees

nvestcorp is pleased to complete the European portfolio. Not only is it a market acquisition of Agromillora. leader, but we believe that there is a real opportunity to grow the business into new Founded in 1986 in Barcelona, I markets. The company has a track record Agromillora is the leading global developer of innovating successfully and we are eager of high yielding plants and trees, with a to work with the management team to help key focus on permanent crops, including it realise its full potential.” stone fruits, citrus, nuts, berries, olive trees and grape plants. In the 1990s and Agromillora’s growth in recent years has early 2000s the Company pioneered the been driven by its consistent innovation production and marketing of trees for high and strong Research & Development yielding olive orchards with the disruptive capabilities as well as by international technology of high-density planting and expansion in North and Latin America, Yasser Bajsair has also been promoting similar agronomic Australia and the Middle East. Today, the improvements for almonds, citrus and company has 11 production facilities in other fruit trees. The company has since nine countries, reaching a market of more diversified providing nurseries and growers than 300 nurseries and 1,500 growers in worldwide with a complete portfolio of more than 25 different countries, and high quality plants through tissue culture employs over 1,200 employees worldwide. propagation laboratories located across five continents and developing proprietary rootstocks for high-density plantation models and products. Commenting on the investment, Yasser Bajsair, Managing Director at Investcorp in the Kingdom of Saudi Arabia, said, ““Agromillora is a great fit for Investcorp’s 14

Corporate Investment

Investcorp consolidates the fragmented IT security sector in Europe

Carsten Hagenbucher

n December 2015, Investcorp acquired and hands-on assistance to its diverse Corporate Investment team, said, “As a SecureLink, a leading IT security client base across Scandinavia and the combined group SecureLink, Coresec solutions company in the Benelux, to Netherlands. and Nebulas will form the second largest Iserve as a platform to consolidate the cybersecurity player in Europe providing This was followed by the acquisition highly fragmented IT security sector in best in breed products suited to a wide of the United Kingdom’s largest Europe through add-on acquisitions. range of industries. With these add-on independent cybersecurity service acquisitions, we believe we are one step In the span of just two months over provider, Nebulas Solutions Ltd closer to forming the leader in pan- the summer of 2016, Investcorp and (Nebulas). Founded in 2001 in London European cybersecurity.” SecureLink announced agreements and employing 50 staff, Nebulas provides to acquire two prominent European a broad range of IT security products Marco Barkmeijer, Chief Executive Officer cybersecurity providers. and services including managed security of SecureLink, added: “SecureLink services and cyber threat intelligence to and the cybersecurity industry have In June, Coresec Systems AB (Coresec) predominantly mid to large enterprises in witnessed exceptional growth and I am was added to the Investcorp portfolio. the United Kingdom. delighted to see us push ahead with our Established in 2003, Coresec offers ambitious European expansion plans. We integrated cybersecurity solutions SecureLink, Coresec and Nebulas now all share the same vision and I am very and manages services to corporates operate across six countries in Europe, much looking forward to the many great and institutions. With more than 250 employing over 550 members of staff and things that I believe will come from our employees across seven offices and generating more than €235 million in synergies.” multiple 24/7 manned Network & Security revenue. Operation Centres, Coresec’s security Carsten Hagenbucher, Managing experts provide relevant security advice Director in Investcorp’s European 15

Corporate Investment Q&A with Marco Barkmeijer, Chief Executive Officer, SecureLink

hat attracted you to there were two parts of Investcorp’s offer and corporates are receiving more SecureLink when you that led to our decision. cyber-attacks than ever before. In fact, governments across Europe now joined in 2008? Firstly, Investcorp brings a lot of value W have cyber risks among their top three When I co-founded SecureLink’s Dutch through their own experience and threats. Finally, regulatory changes. The operations in 2008, I saw it as an knowledge of the IT security market. introduction of regulations such as the exciting opportunity to grow a team with Secondly, we are entrepreneurs and General Data Protection Regulation – specialist knowledge of the cybersecurity we wanted a partner that has a similar GDPR – means companies have to be industry, one that is completely focused mind-set – a firm that can act quickly prepared and ready for when they come on the cybersecurity space. At the time, and decisively. Investcorp showed this into effect. you had large companies delivering throughout the bidding process – with cybersecurity products but there wasn’t the speed they were able to act - and What lies ahead for anyone else that was delivering a they have shown that since. During SecureLink? our recent combined acquisitions of complete solution. At SecureLink, we are We want to grow in every country Coresec and Nebulas, Investcorp added responsible for our clients’ cybersecurity, in which we operate and to expand immeasurable value. We didn’t have rather than just delivering an off-the- into new markets, becoming Europe’s huge amounts of experience in acquiring shelf product. dominant cybersecurity provider. This companies and they were able to drive I also saw a real growth opportunity. isn’t because we want to grow for the the deals through to completion with We could see that the European market sake of growth. No. We are responding to exceptional speed and efficiency. was set for consolidation - we saw it our clients, who are asking us to support happening in the US and we saw it SecureLink, alongside them in their operations throughout the happening in APAC. We have since grown Investcorp, recently acquired continent. into a company of 550 people across Coresec and Nebulas, what do What are your top three pieces Europe, which is bigger than any other they bring to the table? of advice to companies that dedicated cybersecurity player in the Our ambition is to grow SecureLink into want to protect themselves continent. a pan-European cybersecurity player. from cyber threats? Coresec and Nebulas give us access to Four things really make SecureLink It is all about having a holistic approach Scandinavia and the United Kingdom, stand out from our peers – these to cybersecurity. First, you need to have respectively, two very important markets were true when I joined in 2008 and the right technology in place to protect for us. In addition to adding scale, both they are still true today. The deep you. Secondly, you need to ensure your companies have excellent teams that knowledge of its people, its focus on people are trained on how to minimise share our vision and they both have very customer satisfaction, the laser focus risks. Lastly, it is all about preparation similar cultures. on cybersecurity and a desire to keep on – you have to have the right processes attracting the very best talent. The cybersecurity industry has and systems in place in order to respond What made Investcorp the seen phenomenal growth in swiftly and effectively in the event of a right partner for SecureLink? the past couple of years, what cyber-attack. is behind this? When we began looking for a private equity partner, we had initial interest There are three main drivers. One, from 21 firms. We then whittled it down people have more devices that are all to a shortlist of about five. In the end, connected to the internet with their own IP addresses. Two, governments 16

Corporate Investment

Investment in Cloud solutions provider Calligo

arlier this month, Investcorp’s cloud solutions. In our view, Calligo pairs technology investments team made an attractive market opportunity with a an initial investment of $5 million, highly attractive product and a proven and Ewhich can go up to $20 million, in Calligo experienced management team. With our Limited (“Calligo”), a fast growing provider strong track record of working with fast- of cloud solutions focused on serving the growing, founder-owned businesses in the global mid-tier enterprise segment. technology space, we believe that we will be a valuable partner to the company as it Founded in 2012, with the aim of leveraging continues to expand internationally, both jurisdictions across the globe that offer a organically and through targeted add-on robust data protection framework, Calligo acquisitions.” provides a trusted cloud platform for hosting mid-tier enterprises, their data and Calligo is well positioned in the fast growing Gilbert Kamieniecky applications. The company’s proprietary public cloud Infrastructure as a Service cloud platform offers the highest levels (IaaS) market, which grew 51% in 2015 and of data privacy along with application is expected to more than triple in size by performance guarantees, commercial 2020. Mid-size enterprises represent the flexibility and a personalised support fastest growing, most underserved business service. Calligo services hundreds of clients segment with a cloud adoption rate of only all over the world from its locations in 5%. In the first nine months of 2016, Calligo Jersey, Guernsey, Switzerland, Singapore grew its revenues by approximately 100% and Bermuda. The investment by Investcorp year-on-year. is expected to accelerate Calligo’s international expansion with new office locations in North America and the UK. Commenting on the investment, Gilbert Kamieniecky, Managing Director focused on Investcorp’s technology investments in Europe, said, “The mid-tier enterprise segment is lagging behind in adopting 17

Corporate Investment Corneliani Investcorp add another luxury brand to its portfolio

Tarek AlMahjoub

Hazem Ben-Gacem and Corneliani family

ontinuing its long association with the oldest independent Italian luxury over six decades building Corneliani, I luxury brands, in June Investcorp brands. Founder, Carlalberto Corneliani believe the time is right for me to pass announced that it reached an has, alongside his brother Claudio, the company to a trusted custodian who Cagreement to acquire a majority stake in built a business whose clothing line has can build on the vision and journey that I Italian menswear specialist Corneliani. become reputed across the international embarked upon with my brother in 1958. luxury apparel industry. The firm’s I am confident that Investcorp is the best Founded in 1958, Corneliani is a luxury expansion into the casual wear market partner Corneliani can hope for and I clothing brand best known for its men’s has seen its international presence grow have no doubt that they will develop this suits and chic casualwear and is one of significantly, with stores established business to become one of the leading across Europe, the US, Asia and players in its market, similar to the more recently into emerging success stories they have cultivated in markets. Gucci, Tiffany & Co and Dainese.” Corneliani employs approximately Tarek AlMahjoub, Principal, Placement & 1,100 people and benefits from Relationship Management at Investcorp, a global sales presence in 68 said, “With our extensive experience countries through 10 directly developing family-run businesses in the operated stores, approximately luxury fashion industry, we believe that 850 multi-brand stores, more we are well positioned to build greater than 75 franchise stores and 50 brand awareness and add further value store-in-stores, including Harrods, to the company as it looks to expand Harvey Nichols, Saks Fifth Avenue internationally. Corneliani is a world- and Bloomingdales. As the luxury renowned brand and we look forward clothing market has shifted towards to working with its management team more casual lines of clothing, the to help the business reach its full Corneliani brand has adapted potential.” well to the changing conditions, combining tradition, quality and modernity into each new collection. Carlalberto Corneliani said, “After 18

Real Estate Record Levels of US Real Estate Deal Activity

Raleigh Student Housing Portfolio, Raleigh, North Carolina

nvestcorp affirmed its status as the will provide attractive cash yields as well top private Gulf-based investor in US as upside. real estate with a raft of acquisitions The conclusion of these deals represents Iacross the country in recent months. the culmination of a 12-month period In September, Investcorp launched a during which Investcorp saw record portfolio of five multifamily apartment investment volume in real estate of properties and five student-housing approximately $1.5 billion of gross properties in major metropolitan markets. transaction value. According to Real This was followed by the launch of Capital Analytics Investcorp has, for the a 41-story, Class A office building in past 10 years, been the top private Gulf- Seattle, Washington known as 901 Fifth based investor in US real estate. Avenue for approximately $223 million. Herbert Myers Most recently, in November, Investcorp Discussing 901 Fifth Avenue, Herbert launched a diverse portfolio of real Myers, Managing Director at Investcorp, estate properties in the Boston and said, “We believe 901 Fifth Avenue offers Denver metropolitan areas, for a total stable, long-term value in one of the most purchase price of approximately $250 dynamic gateway markets in the western million. The acquisitions are consistent United States. This acquisition further with Investcorp’s strategy to invest in exemplifies our strategy of identifying well-located, high-quality properties alternative investment opportunities that throughout key US markets that it believes can deliver superior returns. What we liked 19

Real Estate

about this Property is its great location. strong growth over the The Property is easily accessible via the next five years. region’s primary freeways and public Little transportation options, and is within Cottonwoods walking distance to high-end restaurants, Apartments retail outlets, hotels, cultural attractions and Seattle’s court houses, fueling Little Cottonwoods significant demand for office space from Apartments is a 379 unit, legal firms.” Class B, “garden style” apartment property Commenting on the acquisitions in located in the Tempe Boston and Denver, Michael O’Brien, submarket of Phoenix, Managing Director of Real Estate Arizona. Phoenix is Investment at Investcorp, said, “Boston projected to have and Denver benefit from strong market amongst some of the fundamentals, which make them highly highest percentage of desirable and appealing locations for employment growth of investments. These acquisitions are a major US markets over natural fit for Investcorp. We believe that the next few years, and our experience in this market, together is also projected to with the strong fundamentals of these experience significant properties, will give us the firepower we rent growth. Little need to maximise the upside potential.” Cottonwoods was 901 Fifth Avenue, Seattle, acquired in joint venture Washington with TruAmerica and is the fourth transaction 901 Fifth Avenue is a 540,589 square done with them. foot, multi-tenanted office building located in Seattle’s central business Raleigh-Nashville district. The Property is 90% occupied by Multifamily a diverse roster of 46 tenants, involved Portfolio in a broad spectrum of businesses, The Raleigh-Nashville including technology, legal services, and multifamily portfolio professional services. Seattle is one is a four property, Centerpoint I & II, Denver, Colorado of the most desirable gateway markets 1,176 unit, Class B for real estate investments in the US, apartment portfolio and has one of the lowest vacancy and Raleigh boasts a healthy labor market, with three assets located in Raleigh, highest projected rent growth rates. The with new and expanded companies North Carolina and one in Nashville, region has had an annual employment attracted by its affordable cost of living Tennessee. The properties are in upscale growth rate of 2.8 percent compared to and high concentration of growing suburban neighborhoods, offering the national rate of 1.9, and has projected industries. Nashville has one of the lowest convenient access to employment hubs.

Michael O’Brien

The Avenue, Indianapolis, Indiana 20

RealReal Estate Estate

901 Fifth Avenue 901 Fifth Washington Seattle, 21

Real Estate

4050 Lofts, Tampa, Florida unemployment rates in the country, and The Raleigh Student Housing portfolio is occupied. The industrial market in Boston a well-diversified economy driven by a comprised of three recently built, Class has been fueled by robust demand for real skilled labor force, low cost of living and A student housing communities totaling estate due to growth in the e-commerce pro-business environment. The Raleigh- 890 beds in Raleigh, North Carolina. field. Nashville portfolio was acquired in joint These properties serve students attending The second Boston acquisition, venture with Redwood Capital Group and North Carolina State University and have Blackstone Science Square, is a 99 is the fourth transaction with them. historically maintained nearly 100% percent leased 76,038 square foot occupancy. Tampa and Indianapolis office/lab property in Cambridge, Both student housing transactions were Massachusetts, leased primarily to The Tampa and Indianapolis properties acquired in joint venture with The Preiss tenants in the life-sciences industry. are comprised of two recently built, Class Company and represent the fifth and sixth Located between Harvard and MIT, A student housing communities totaling transactions with them. Cambridge is home to over 300 life 1,080 beds; with 722 beds located in science and technology companies, Tampa and 358 in Indianapolis. These Boston portfolio representing the largest concentration of properties serve students attending the Boston is the 10th largest metropolitan life science firms in the US University of South Florida and Indiana area in the US with an unemployment University-Purdue University Indianapolis, rate of 3.5 percent, well below the Denver portfolio respectively, and average close to 100 national rate of 5 percent. Boston Metro Denver, the 21st largest metropolitan area percent occupancy year over year. Industrial, a 900,000 square foot, four in the US, is consistently ranked as one of Raleigh Student Housing Portfolio building industrial portfolio, is 95 percent the fastest growing cities in the country with the population expected to increase to over 3.5 million residents by 2020. In 2015, Forbes rated Denver as one of the best places in the country for businesses and careers. This is highlighted by Denver’s current below-average unemployment rate of 3.2 percent. Investcorp has acquired several commercial properties in the Denver area, including Centerpoint I & II, a 370,000 square foot office complex in Denver’s Midtown submarket. The Firm has also acquired Arapahoe Business Park and 345 Inverness, a portfolio of 10 office/ flex properties comprised of 485,000 square feet and located in Centennial and Englewood, Colorado.

Blackstone Science Square, Boston, Massachusetts 22

Events and Conferences

Investcorp hosts its inaugural event in collaboration with Dubai Chamber of Commerce and Industry

nvestcorp hosted a group of young worldwide, and the expertise it has Dubai Youth Council aims to strengthen Emirati business leaders at the Dubai in place to transform businesses into the cooperation and coordination Chamber of Commerce and Industry’s industry leaders and move them into the of the two organisations to promote Iheadquarters in Dubai, on 29 September next phase of their growth strategy. the development of skills amongst 2016, for a knowledge-sharing seminar young Emirati business leaders in In his opening remarks, Mr. Al-Shroogi on “How to take mid-market companies Dubai through thought leadership and emphasised Investcorp’s ongoing to the next level”. This was the first knowledge sharing seminars. commitment to share knowledge and of a series of workshops and training expertise in the UAE and Dubai in seminars that Investcorp had agreed particular, saying: “We see the UAE as a with the Dubai Chamber’s Tejar Dubai second home for Investcorp as we have Youth Council in a Memorandum of been active in this market since the Understanding (MoU) signed earlier this inception of the Firm. It is outstanding year. to see how the UAE continues to be a Led by Investcorp’s Co-Chief Executive model that inspires other countries Officer, Mohammed Al-Shroogi, and around the world. What Dubai has Head of Corporate Investment - North achieved over a very short span of America, David Tayeh, the Seminar time is testimony to the great efforts discussed Investcorp’s extensive of entities such as Dubai Chamber of experience in working with family Commerce and Industry.” businesses in the GCC region and Investcorp’s partnership with Tejar 23

Events and Conferences

Mohammed Alardhi Discusses Global Business and Global Crises at Harvard Symposium in New York city ohammed Al Ardhi spoke at the inaugural “Private Interests, Public Issues” Symposium on M5 October 2016 at the Harvard Club in New York City, which was hosted by the Harvard Law School Association of New York City and the Harvard Business School Club of Greater New York. The Symposium brought together an elite group of Harvard Business School and Harvard Law School alumni and industry and public sector leaders to discuss the major issues facing the global economy today. Mr. Alardhi participated in the ‘Global Business and Global Crises’ panel and discussed topics including economic their economies using the current up to its values when dealing opportunities in the Gulf amid current oil challenging economic landscape with refugees and the importance prices, the importance of innovation, the opportunistically; of integrating refugees into the workforce as a manner of driving GDP refugee crisis and Brexit. During the panel • The critical need for businesses and growth; and discussion, he provided insight into key governments globally to embrace global business challenges, emphasising innovation post the financial crisis • Investcorp’s belief that London the following: in order to drive change and create will remain a global financial hub • The role GCC countries will continue a stronger business and social providing access to European markets to have in globalisation and business environment; with attractive opportunities for investors. transformation, specifically how • The fact that the international the GCC countries should diversify community is not currently living 24

New Joiners

Investcorp makes strategic hires across the business

s part of our ongoing investment in people and infrastructure, we Investcorp welcomed [14] new joiners over theA last seven months, with strategic hires continues to invest made across our various business units. in attracting and We are very pleased to have with us Andy Stevens, who joined Investcorp as an retaining industry Adviser to the Executive Committee. Andy will provide strategic advisory services top talent with a particular focus on Investcorp’s growth initiative to more than double its assets under management and net income American team. Elsewhere, Julian over the medium term. Bennet joined as a Vice President within Corporate Investment European In Finance and Treasury, Daniele Vecchi Technology. Finally, Oguz Oner was joined Investcorp as Managing Director appointed as a Vice President in the and Head of Treasury and Investor Corporate Investment MENA team. Relations. Prior to Investcorp, Mr. Vecchi worked for Transmed in Beirut, where he In Corporate Development, Habib held the position of Chief Financial Officer. Abdur-Rahman joined Investcorp as a Vice President. Meanwhile, Investcorp’s In Product and Relationship Management recently launched Real Estate Europe team (PRM), we were pleased to welcome welcomed Pierre De La Rochefoucauld as Gabriel Aractingi as Managing Director. a Vice President. He will assume the role as head of central and eastern province once approved by the regulatory authorities in Saudi Arabia. Mr. Aractingi joined Investcorp from Morgan Stanley Saudi Arabia, where he was country CEO. Meanwhile, Fahad Kurdi, Manaf AlMenaifi, Nahar Houthan, Vicente Perez Camara and Yousef Alhozaimy all joined the PRM team as Principals, with Khalid Soufi joining as an Associate Vice President. Corporate Investment welcomed Kirk Fleischer as a Principal in its North 25

New Joiners

Andy Stevens Gabriel Aractingi

Manaf AlMenaifi Nahar Houthan Vicente Perez Camara Daniele Vecchi

Khalid Soufi Fahad Kurdi Kirk Fleischer

Yousef Alhozaimy

Julian Bennet Oguz Oner

Habib Abdur-Rahman

Pierre De La Rochefoucauld 26

Global Macro Outlook by Rebecca Hellerstein Global Macro and Markets Outlook ollowing a tumultuous start to the the G7 economies has continued to creep year, when investors contemplated higher, as illustrated above. This nowcast the risk of a return to a deflationary measure is designed to lead official Fenvironment, the second half has unfolded industrial production releases by roughly on a quieter note. Indeed, equity market three months. Historically, inflection realised volatility has broken to historical points in the series have been associated lows, with the S&P 500 index pinned at 2175 with major turning points in the business for much of the summer. Although index cycle—and in markets. The continuing investors enjoyed a well-deserved summer upward trajectory suggests further growth lull, factor investors were swept along acceleration in the coming months. in yet another wild ride. Macro surprises The pick-up in growth was accompanied by signaled the onset of an inflationary Rebecca Hellerstein upside surprises in inflation. As illustrated regime, with significant consequences for below, the Citi US Inflation Surprise index, alternative risk premia. which tracks forecasts relative to releases, Since hitting a trough in February, our has accelerated higher since April, with proprietary leading economic indicator for data surprises consistently outpacing

IVC Global Leading Economic Indicator Developed Market Growth

Source: Google, Investcorp

-2%

-4%

-6%

-8% Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 27

Global Macro Outlook by Rebecca Hellerstein

Citi US Inflation Surprise Index

Source: Citi, Bloomberg

Chart -10

-20 market expectations. This has spurred higher volatility across certain market -30 themes (e.g., “lower for longer”) as investors reevaluated positioning amid -40 the shift toward the inflationary end of the spectrum. Inflation breakeven rates ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 moved higher, in line with equity value, while more defensive sectors significantly an official acknowledgement that flat from maturity-transformation activities, underperformed. yield curves are counterproductive to the is critical to its efforts. It is yet to be With respect to monetary policy, the central bank’s stated objective of reflating seen whether the new framework third quarter saw some significant the economy. Excessively low long-term will sufficiently revive Japanese bank developments. Once again, the BoJ took interest rates put enormous pressure on fortunes. So far, at least, investors have center stage, as it shifted its focus away commercial bank profitability, impeding given the Japanese central bank the from quantitative easing, to an innovative a key monetary policy transmission benefit of the doubt: bank stocks have framework referred to as yield-curve mechanism. In essence, the BoJ finally outperformed since hitting relative lows targeting. The new policy is meaningful recognised that the health of its banking in June. for several reasons. First, it represents system, including its ability to profit Another reason why the BoJ’s turnabout is noteworthy is because it calls attention to how significantly central banks’ Relative Performance of DM Banks quantitative easing policies are being impacted by current supply-and-demand Source: Google, Investcorp dynamics. At the prior pace of the central bank’s targeted bond purchases, the BoJ 110 Banks Alpha would have been left holding nearly half of the Japanese government bond market by the end of 2017, as illustrated in the table below. Obviously, this had broad implications for JGB liquidity and cast 90 doubt on the central bank’s ability to sustain such measures. That said, the new framework has likely moved markets a step closer to the unfortunate realisation that monetary authorities have exhausted policy toolkits. Short of introducing 70 “helicopter money,” we expect the impact of the shift to remain limited with respect to the growth and inflation outlook, which has consequences for the long- term balance of risks. 50 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 INVESTCORP INVESTCORP BANK B.S.C. INTERNATIONAL LTD. Investcorp House Investcorp House 48 PO Box 5340 Grosvenor Street

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